Stata says company's Bengaluru operations now has full business and technology responsibility for DSP chips. The centre started by designing of products, but since then has taken over the test development, the application support and even the worldwide business responsibility Sujit John | TNN | July 11, 2018, 10:30 IST

Ray Stata is now 83, says he’s a little hard of hearing, and doesn’t like to travel as much. He used to come up to three times a year to India about a decade ago. But the visits are now drastically down.

Analog Devices, the company he co-founded in 1965 and which did pioneering work in data converters – chips that convert analog data such as speech, music, video, light, pressure and temperature into digital data and vice versa – has expanded significantly in India. It recently launched a semiconductor design facility in Bengaluru that can accommodate 1,000 people. It has a little over 600 employees in the city now.

In an exclusive interaction with TOI, Stata, who is now the chairman of the $3.5-billion company, spoke about how India has transitioned from developing software for chips to being the semiconductor design house of the world, and is now moving on to a product-driven ecosystem.

You have been coming here for many years. Give us an idea of how things have changed? How do you view the quality of work now?

We have built quite a competent group of people, over the years they have become more experienced. So today, we have world class designers here. They can hold the ground against anyone, any other company. We are able to do some pretty advanced work here now.

Can you provide some examples of such advanced work?

The place where we focused our early attention here was digital signal processing. In that area, we have captured a significant share of the professional (high-end) audio business, the likes used by Denon, but also more significantly in the auto industry. We call it audio signal processing.

We are introducing a new innovation in the area of noise cancellation (cancelling out engine noise, road noise), something that automakers have been asking for a long time. They build the noise cancellation systems to the head rest.

One of the challenges is the cabling, to get all the signals back and forth. Cars already have a lot of cabling. We came up with a revolutionary way of transmitting the signals. Around the car we used what we call a single twisted pair, not a big set of cables. It is a low cost type of wiring where we can get high speed transmission and therefore a lot of information on the same wire all around the car. The result is we have saved substantial cabling costs.

Some of this work has been done here. The centre has also worked on car radar systems, those that detect objects close to the car. They are rather complex chips. Then they do high precision analog-digital converter products.

In the case of DSP (digital signal processing), they started by just designing of products, but they have since taken over the test development, the application support and even the worldwide business responsibility.

The entire business responsibility?

Yes. They do product planning, they engage with the customers, they do the road mapping, the product development, tests. In this building, we have very expensive testers. They do the complete product here. So, we started in India with digital, then mixed signal processors, then process technologies for the converter products, now we have RF (radio frequency) technologies for wireless. So it’s a very broad diversified technology group.

Do you have a similar operation in China?

We do, in Shanghai and in Beijing, but they are not as large as is it here, but we have some world-class designers there too.

What is the difference in the talent in China and the talent here?

The US system is just not producing enough engineers to support the industry. So, one part of the operations in India and China is the access to talent. The other part is to have people in the region to serve the needs of customers in the region. China is further developed than India. Here the software world is just fine, but when it comes to silicon and communication systems and other areas, China is far better. The customers there need support, we have to design products for them.

The distinguishing part of technology in India is, it started out on the software side, and it has migrated to being the (semiconductor) design house of the world. That happened because of multinationals like Analog Devices and Qualcomm, which employed thousands of people. And a lot of small companies as well as large, for example Wipro, one aspect of their business is design. There is quite of proliferation of that competence here.

I think that’s why we see so many multinationals building up their capabilities here. Over enough time, I think that will translate into more product-driven companies. Some companies now are transitioning from being a design house to be a product company.

For the semiconductor industry, what are the newer requirements emerging?

In the early days, the innovation was sort of bottoms-up, from the point of view of process technology innovation, product line performance improvements, for example, Op-Amps (operational amplifiers), controllers. You are continuously making those components better and better.

This Stanford guy, Brian Arthur, wrote a book called `The nature of technology’, very interesting book. He talked about how innovation evolves – in the early days, it is bottoms-up components level development. He makes the point that sometime you reach a tipping point where the fundamental nature of innovation changes, what he calls the combinatorial innovation, and that is, how do you take all these different pieces and put them together into a system.

In our business, there is the era of the system-on-a-chip, which had its early evolution in the digital microprocessor area. Now it’s coming to the analog-oriented companies. We take Op-Amps, converters and RF circuits and we put them together into a systems chip. The innovation is now to have a deeper understanding of what the customers are trying to achieve and the environment in which the customer is competing. And doing essentially the systems design for them. When you come to that point, there is a vast proliferation of possibilities that are both useful and economically feasible.

So, the challenge that you have in this era of innovation is picking through all the possible combinations and defining where in the market place can you sustain a competitive advantage, by having a deeper understanding of your customers.

Cellphones have been trying for a long time to see how much of their systems they can integrate. Cluster more functions on a single chip so the price comes down.

In the base station, in wireless communications, Analog has been an innovator in integrated transceiver chips – silicon that receives the signals and then transmit the signals back. The way that was historically done is, there used to be a group of components at the receiver and group of components at the transmitter.

Now we are able to integrate all the stuff on a single chip. And do it in such a way that they are software programmable. There are a large number of frequency channels. So they don’t have to make a transceiver for every one of those, they can tune up the software programme for the particular channel, so you can reuse the silicon.

The challenge for us and the industry is that we make pretty significant investment in the chip developments. And if you don’t get it right, if we haven’t figured out what the customers really want or if you are late to market or the customer thought they had a good product but they don’t and a whole bunch of things go wrong, and you have spent all this money, then you don’t get returns. The risk factors have gone up. So we have to be much more competent in our understanding of market requirements.

Right now, is automotive the fastest growing vertical for you?

In terms of the drive for integration or the growth of the market opportunity?

Both.

I would say that the automotive sector over the next five next years would be one of the fastest growing segments. Right now, the communication and infrastructure segment have slowed down a bit, everybody is waiting for 5G, so the investment in 4G has slowed down. But measured over time, communication will be a very big opportunity and we have put lot of money into that. We are ready for 5G. The chips we have put in here are expensive developments.

Some say that the long-distance truck segment is where the world will first see full-fledged autonomous driving. How soon do you think that will happen?

There are so many people focused on that and they are driving the technology like crazy. In China, Baidu is making colossal investments in that and the Chinese government is intent on having a leadership position in that. So, I think we are going to see different levels of autonomy and I think that market is going to come a lot sooner than we think just because there is such a tremendous driving force.

And this whole thing about entertainment systems in the cars, it just gets more and more sophisticated, like backseat TVs and noise cancellation, and higher quality audio systems. The content that goes with these automobile things is just amazing. In a 3-5-year time frame, you are going to see large deployments of these technologies.

You have a venture fund, have you ever thought of investing in Indian startups in semiconductors?

I have a strong relationship with MIT (Massachusetts Institute of Technology, US) and am well connected with all the new stuff emerging. So, one of the focal points of my investment is seed level funding, in early technologies. I am looking for exciting new stuff. From a financial investment point of view, it is high risk-gain, because many of these things don’t make it. But from the point of view of a technology junkie, it’s a lot of fun.

Have you bet on any startups in India?

I did, there is one investment in this company called Uniphore, which I made several years ago. I invested in the early years of the cycle of entrepreneurship here, I invested in a company in IIT Madras and they failed. The company failed but people learned a lot. I had invested in a company in the wireless communications business, and when they failed, Tejas hired 12 of their engineers because they were working on a wireless base stations strategy.

But I’m not investing much now. If you have to invest, you have to come visit often. And I’m getting a little old for these flights. But my sense is, from the people I know, there are some very attractive opportunities coming up. The industry is probably early in the cycle.

Lip Bu Tan (CEO of Cadence) has been making some investments...

He sits in a privileged position because he is the CEO of Cadence that supplies the tools. So he has an early indication of the new companies, what they are doing. He has a very good situation going. Does that in China as well.